Bundesbank launches simultaneous 2-pronged attack on US Dollar and Euro!

And finally: So it begins with the ringing of the first bell!

In news that is of earth-shattering consequence to currency warfare, Bundesbank [German Central Bank] drops a bomb. Well, not exactly. Mutterings regarding need to audit gold belonging to Bundesbank, but held outside Germany had been occurring in German press few months ago. So this is not exactly very surprising news. What has followed now is an all out demand for repatriation of a lot of this gold.

Bundesbank to pull gold from New York and Paris in watershed moment

Now, I'm not going to quote cut-pasted extracts from this article; because in my opinion the article commentary itself is somewhat muted. My personal take is a lot stronger.

Quite frankly, I believe this is a simultaneous 2-pronged attack by Bundesbank on both the US Dollar AND the Euro! After the fiasco of yet another US debt-ceiling raise, Bundesbank is making it clear that they have no confidence left in any hallowed status for US Dollar. It has no confidence left in the money printing one trick pony schemes of Federal Reserve. Specifically, if and when the US debt panic accelerates, Bundesbank has no confidence left if Federal Reserve will account its foreign gold holdings towards US holdings instead. On the basis of contract rights, that is a very strong sentiment and is really saying something.

Now even more curious is the attack on the credibility of Euro itself. Does that even make sense, meaning Euro being the currency of use in Germany right now? It's quite simple. What Bundesbank is doing is asserting its sovereignty over and above European Central Bank. In my opinion, they're well within their rights entitled to it. This is a perfectly logical and justifiable move. [From American perspective, the closest equivalence to this I can think of is the Tenth Amendment and state's rights/sovereignty issue.]

Against this backdrop, consider the disingenuous efforts of Angela Merkel's German government recently regarding bailouts of Greek and Spanish economies. Consider the proclamations of "wanting to do everything in their power to protect hallowed status of Euro". Actions of Bundesbank in demanding repatriation of ALL of its gold out of France seem to be diametrically opposed to the actions of German government.

It's going to be very interesting checking what official response Federal Reserve and US Government give to this demand. Most predictable response I can think of is Obama, Ben Bernanke and the new US Treasury Secretary running off to Germany, and trying to put pressure on German government to put off this demand. [Whatever is the name of this Treasury Secretary after Timothy Geithner, I'm too lazy to look it up. And in my opinion that position has become subservient to Federal Reserve anyway.] But it's not as if they have too many options. They certainly can't declare war on Germany over this issue, can they?

All I can say is, this is simply the beginning, not an end. It is likely to get extremely turbulent and interesting as things develop. Grab your [non genetically modified] popcorn and watch the action.